Friday, October 17, 2014

Medicaid and Nursing Homes

WHAT
IS MEDICAID?..........

Medicaid
is a Federal medical bills assistance program that pays medical bills for
eligible, needy persons. It is administered by each state. All payments are
made directly to the providers of medical and other health care services. The
Medicaid-eligible person does not pay the health care provider for services.
The only exception is a patient in a Medicaid-approved nursing facility who may
be required to contribute part of his/her income toward the cost of care.

Medicaid
Planning After Reform

By
Thomas D. Begley, Jr.

Congress
has passed the Deficit Reduction Act of 2005 which seriously curtails Medicaid
Asset Transfers and makes it much more difficult for people to become eligible
for Medicaid. The Bill was backed by the Insurance Industry and the
Pharmaceutical Industry with AARP opposing the bill on the side of consumers.
The vote was 216 to 214 in the House of Representatives and Dick Cheney had to
break a tie in the Senate.

1.1.2.
Beginning Date. The beginning date of the period of ineligibility has changed
from the date the transfer was made to the later of the date of the transfer
was made or the date the individual:

would
be eligible for medical assistance; and

would
otherwise be receiving institutional level care based on an approved
application for such care, but for the application of the penalty period,
whichever is later; and

which
does not occur during any other period of ineligibility.

1.1.3.
Commentary. The effect of these provisions will be to make it much more
difficult to transfer assets and to obtain Medicaid eligibility.

2.
6012 Disclosure & Treatment of Annuities.

2.1.
Disclosure of Annuities.

2.1.1.
Disclosure. At the time of a Medicaid application or re-certification of
eligibility the applicant must disclose a description of any interest the
individual or community spouse has in an annuity. The state may require the
issuer to notify the state when there is a change in the amount of income or
principal being withdrawn.

2.2.
Treatment of Annuities.

2.2.1.
State Named as Beneficiary. Transfer of an annuity shall be treated as a
transfers of assets for less than fair market value unless:

Remainder
Beneficiary. The state is named as remainder beneficiary in the first position
for at least the total amount of medical assistance paid on behalf of the
annuitant; or

Second
Position. The state is named as a beneficiary in the second position after the
community spouse or minor or disabled child and is named in first position if
such spouse or a representative of such child disposes of any remainder for
less than fair market value.

2.2.1.1.
Design of Annuity. Annuities are not subject to the transfer of assets
provisions if:

it
is owned by IRA or purchased with the proceeds from an IRA, an SEP, or a Roth
IRA; or

the
annuity is:

_
irrevocable

_
non-assignable

_
actuarially sound as determined in accordance with the actuarial publications
of the Office of Chief Actuary of the Social Security Administration; and

provides
for payments in equal amounts during the term of the annuity with no deferral
and no balloon payment.

Commentary.
This means only that the purchase of an annuity is not subject to the transfer
of asset penalties. The issue as to whether the annuity is a countable asset is
not addressed.

3.
6013 Income First. States must follow the income first rule when calculating an
expansion of the Community Spouse Resource Allowance.

Commentary.
New Jersey has always followed the Income First Rule.

4.
6014 Home Equity.

4.1.
Limits. A person is ineligible for Medicaid if he has equity in the home in
excess of $500,000 or at state option $750,000. This number is indexed for
inflation.

EXCEPTION:
The maximum amount does not apply if the home is occupied by:

spouse child
under age 21

child
who is blind or permanently and totally disabled

4.1.2.
Loan. The applicant is encouraged by the Act to obtain a reverse mortgage or
home equity loan to reduce equity.

Commentary:
This restriction is not as severe as it may first appear and may actually
present some planning opportunities

Commentary:
Many lawyers simply ignored provisions in CCRC contracts restricting transfers.
These are now clearly enforceable under the new law.

6.
6016 Additional Reforms of Medicaid Asset Transfer Rules.

6.1.
Partial Month Penalties. Partial month penalties are mandated.

6.2.
Accumulation of Multiple Transfers.

Fractional
transfers of assets in more than one month are accumulated.

Transfers
during all months are treated as one transfer.

Commentary:
This makes small gifts impossible in many situations.

6.3.
Notes and Other Loan Assets. For transfer of assets purposes promissory notes,
loans and mortgages are included unless:

they
include an actuarially-sound repayment term as calculated by the Office of the
Chief Actuary of the Social Security Administration; and

payments
are made in equal amounts with no deferral or balloon payment; and

the
document prohibits the cancellation of the balance upon the death of the
lender. 6.4. Purchase of Life Estates. The purchase of a life estate is not
considered to be a transfer of assets if the purchaser resides in the home for
a period of at least one year.

Commentary:
There may be situations where this portion of the statute presents additional
planning opportunities. There are some serious risks involving the due on sale
clause in mortgages and capital gains tax considerations for the parent and
child that need to be considered, but in the right situation this will present
a planning opportunity.

7.
PLANNING OPPORTUNITIES ELIMINATED. Opportunities that have been eliminated
include the following:

Transfer
Assets/Wait Three Years

Half-a-Loaf
Transfer

Monthly
Transfers

Lookback
Period

Transfers
from Retirement Plans within a Lookback Period

SCIN
- By definition a SCIN is a loan that cancels on the death of the lender.

8.
CONCLUSION. There are a number of planning opportunities that remain under the
new law, but many of them will not have been tested. Clients may be required to
apply for Medicaid, be rejected, apply for a Fair Hearing and in some instances
appeal to the New Jersey Appellate Division and possibly even the New Jersey
Supreme Court before these strategies are validated. Medicaid Planning is no
longer for the faint of heart. Elder Law will become much more of a litigation
practice than a transactional practice. Clients should consult an experienced
Elder Law attorney who is not easily intimidated.

About
the Author: Begley & Bookbinder, P.C. is an Elder & Disability Law Firm
with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and can
be contacted at 800-533-7227. The firm services southern and central New Jersey
and eastern Pennsylvania.

Thomas
D. Begley, Jr. lectures with Kenneth Vercammen for the NJ State Bar
Association. Thomas D. Begley, Jr. provides services in connection with
protecting assets from nursing home costs, Medicaid applications, Estate
Planning and Estate Administration, Special Needs Planning and Guardianships.
If you have a legal problem in one of these areas of law, contact Thomas D.
Begley, Jr. at 800-533-7227. Mention you were referred by Kenneth Vercammen.
Esqs email newsletter.

Resource
and Income Limitations for Spouses of Medicaid Applicants

by
Dana E. Bookbinder, Esquire

Now
that the President has signed the Deficit Reduction Act of 2005, it is even
more crucial for families to be proactive in protecting their loved ones health
care options and financial savings. Often individuals are lulled into thinking
that the government will not aggressively pursue their assets if they dont
engage in legal planning, but the opposite is in fact true. In cases of married
couples, the healthier spouse often mistakenly believes that his or her assets
are safe while only the ill spouses assets have to be paid to a nursing
facility for that spouses care. Again, this is incorrect, and early legal
planning can save the family much grief in addition to substantial assets.
While both married and single individuals can substantially benefit from early
legal planning, under Congress new budget saving scheme, married couples, in
particular, would be passing up the opportunity to protect their savings if
they failed to seek legal counsel since the asset and income limitations they
would face for Medicaid eligibility are low.

The
resource allowance permitted to be retained by the spouse of a benefits
recipient is known as the Community Spouse Resource Allowance (CSRA). This
allowance was established by the Medicaid Coverage Catastrophic Act (MCCA),
enacted to apply to individuals institutionalized on or after September 30,1989
to protect spouses against impoverishment.

The
amount of the community spouse resource allowance is generally based on one
half (1/2) of the couples combined total countable resources as of the first
period of continuous institutionalization. A resource assessment of the couples
countable assets as of the first period of continuous institutionalization of
one of the spouses will be undertaken when a Medicaid application is filed. By
law, it must also be done upon the request of the Medicaid applicant, the
applicants spouse, or the personal representative of the applicant or the
spouse. A continuous period of institutionalization is broken by absences from
the institution for thirty consecutive days. For 2006, the CSRA is subject to a
maximum of $99,540 and a minimum of $19,908. These numbers are adjusted on an
annual basis.

In
addition to a resource allowance, the spouse of a Medicaid recipient is
entitled to a monthly income allowance. Generally, the income of an individual
who is institutionalized must be forwarded to his nursing home on a monthly
basis. However, this spouse is allowed to retain her own income plus, depending
on the amount of her income, a monthly allowance to be taken from the
institutionalized spouses income. This allowance is called the Minimum Monthly
Maintenance Needs Allowance (MMMNA). Currently, the amount is based upon the
difference between $1,604 and the community spouses income plus an additional
amount to cover shelter expenses for the community spouse. The shelter expenses
are based upon the actual mortgage and real estate taxes that must be paid plus
certain allowances for utilities. These figures upon which the MMMNA
calculation are based are adjusted annually.

Failure
to plan ahead for the long-term care costs of a spouse can severely impact the
healthy spouses financial status. However, elder law attorneys can increase
both the spouses resource and income allowances through agency hearings.
Additionally without a hearing, elder law attorneys can help their clients
maintain their standards of living, enabling them to continue living
independently in their homes.

Begley
& Bookbinder, P.C. is an Elder & Disability Law Firm with offices in
Moorestown, Stone Harbor and Lawrenceville, New Jersey and can be contacted at
800-533-7227. The firm services southern and central New Jersey and eastern
Pennsylvania.

The
Firm provides services in connection with protecting assets from nursing home
costs, Medicaid applications, Estate Planning and Estate Administration,
Special Needs Planning and Guardianships. If you have a legal problem in one of
these areas of law, contact Begley & Bookbinder at 800-533-7227.

WHO
QUALIFIES FOR MEDICAID?........

-Aged
persons 65 and over, blind persons or disabled persons who apply through their
Social Security District Office and who receive monthly Supplemental Security
Income (SSI) checks. -Aged persons 65 and over, blind persons or disabled
persons who may not be eligible for SSI due to excess income but who meet the
income and resource criteria for New Jersey Care.... Special Medicaid Programs. -The
Medically Needy segment of New Jersey Care....... Special Medicaid Programs
provides limited services to certain needy individuals who are not eligible for
Medicaid due to excess income but may not be able to afford health care
services. Contact the Department of Human Services for other eligible
requirements.

WARNING..........

The
following acts are crimes under Federal and State Law and persons found guilty
of the acts can be fined up to $10,000 or put in prison for up to 3 years or
both. -Lending your Medicaid card; - Giving any information known to be false
in order to gain Medicaid benefits; - Hiding any information about the
occurrence of an event that you know will bear on your right to Medicaid
benefits or the right of another person for whom you applied and who is
receiving Medicaid coverage; - Applying for Medicaid for another person and
using the benefits for yourself or someone else who is not eligible. See Medicaid,
what is it by NJ Department of Human Services, Division of Medical Assistance.

Your
Responsibilities when applying for Medicaid

You
must give complete and factual information on the application. You must provide
or apply for a Social Security Number. You must promptly notify the county
welfare agency whenever there is a change in your existing income, or an
additional income or resource, such as:

*
income from a new job or loss of an old one * change in wages from full or
part-time job * Workers Compensation * unemployment or temporary disability
benefits * Social Security or Veterans benefits * pension or other retirement
benefits * Supplemental Security Income (SSI) * interest on savings * accident
claims or settlements * support payments * an inheritance of money or property *
money from the sale of property * funds received in settlement of s claim or
legal suit * lottery winnings or other awards * any other change in income or
resources * court action related to any of the above See Medicaid, what is it
by NJ Department of Human Services, Division of Medical Assistance.

If
you are residing in a nursing facility, you must also report:

*
when you obtain or drop health insurance coverage * changes in health insurance
premiums * changes in spousal income, if you are paying spousal maintenance

The
Law requires that all health and accident insurance benefits, including
Medicare, Workers Compensation and No Fault Auto Insurance must be used before
Medicaid in the payment of health care.

You
must agree to assign to the Commissioner any rights to payment from any third
party.

When
applying to the county welfare agency for special institutional services
including nursing home care, you must make an accurate report of your actual
income. Normally, that income ( except for a personal needs allowance and
certain disregards, if applicable) must be applied to the cost of your care.

You
must authorize the county welfare agency to contact any source that may have
knowledge about your circumstances ( including IRS, Social Security wage and
benefits files, and state wage and employment files), for the sole purpose of
verifying the statements that you make on the application. See Your Rights and
Responsibilities when applying for Medicaid by NJ. Department of Human Services,
Division of Medical Assistance and Health Services.

If
you or a spouse have to enter a nursing home to receive custodial type care,
your assets (other than your residence and various personal items which may be
exempt under certain circumstances) are worth less than $2,000, and the income
of the person entering the home (including Social Security) is no more than
$1,410 per month for 1996, then you may be eligible for this government program
which can pay for substantially all of the cost of the nursing home. Moreover,
it is possible for a married spouse who remains at home to preserve a
significant portion of the assets of the couple if the other spouse is
institutionalized. In 1996, the law permits a minimum of $15, 348 of such
assets to be protected. And, depending upon the amount of such assets, a
maximum of one-half (but not exceeding $76,740) may be preserved. In addition,
in the case of married persons, it may be possible to have some of the income
of the spouse in the nursing home paid to the at home spouse without affecting
eligibility for Medicaid Only.

When
considering an application for Medicaid, one should bear in mind that the rules
are fairly complicated, and that transfers of assets to third parties (such as
gifts to children) in order to become eligible for the program can result in a
penalty period being imposed during which payments by the State will not be
made for nursing home care.

____
The penalty is a period of ineligibility for Medicaid, determined by dividing
the value of the assets transferred by the average cost of a nursing home in
New Jersey. States must apportion the period of ineligibility between spouses
so that only one penalty applies. In the case of joint assets, a withdrawal by
one party is considered a transfer. The new law subjects transfers of income to
a period of ineligibility. Transfer penalties can be avoided by returning all
of the assets which were transferred. The law made significant changes in the
area of trusts. However, certain types of trusts are still permitted. The
Secretary of Health and Human Services was directed to promulgate regulations
concerning annuities. As of this writing, those regulations have not yet been
promulgated. States are now mandated to recover payments from the estates of
Medicaid recipients.

Hearings

If
your application for Medicaid benefits is denied, if your Medicaid eligibility
is terminated, or if Medicaid refuses to pay a claim, you have a right to a
fair hearing before a New Jersey Administrative Law Judge. At that hearing you
have a right to be represented by counsel and to present evidence including
testimony to support your case. The judge makes a recommendation to Medicaid
regarding your case. Then, if Medicaid still denies your claim, you have a
right to appeal to the Appellate Division of the Superior Court of New Jersey.
In a situation where Medicaid has advised you that it intends to discontinue
the payment of benefits, you may have a right to have benefits continued until
your appeal has been decided. At the time of this printing, the Federal and
State Governments are considering substantial changes in both Medicare and
Medicaid. See New Jersey State Bar Foundation, Law Points for Senior Citizens. We
recommend the purchase of Long Term Health Insurance/ Nursing Home Insurance]

For
more information, go to http://njwillsprobatelaw.com/medicaid2006nursinghomes.html?id=601&a=